Poverty's prospects: how a development bank president sees it

April 28, 1981

Q. How do you define poverty?m A. Poverty is a relative concept. We may find poor people in the United States as well. Although the Asian people are poor, they may not have the sense of it as in developed countries. The region has about 80 percent of the world's poor. We have to uplift the whole. In a sea of poverty, everyone feels rather relaxed. That is the reality.

In Asia there are islands of affluence in a sea of poverty. The Asian Development Bank projects should reach that sea, not the islands. That is why we emphasize rural development --

The conspicuous feature of Asia is rice-growing, and there are very small farmers here -- one acre or so each. Projects should be oriented to raising income in rural areas. Relying on export industries would be like rootless flowers. A nation's root should be firm on rural areas, supported by demand from rural areas.

A. Usually, the region is subject to vagaries of weather. It has a condition of drought and flood. What we can do is to minimize that impact through water management, or perhaps other development. But we cannot conquer nature's power.

Q. What are Asia's poorest countries?m

A. Bangladesh and Nepal. Bangladesh is on a delta and not far from nature's insurmountable strength -- rotating flood and drought. There are no rocks there , none at all. It is very unfavorable. In the same context, Nepal is a mountain area and has no room for expansion of cultivable land. So the question is how to increase productivity in mountain areas.

Q. Why should the US continue support of the ADB?m

A. Development in Asia is an investment in the 21st century. US aid will enlarge the frontier for the American people.

The United States has not only been a strong supporter of the bank but a stalwart along with Japan, Australia, and other major donors.

It is very difficult to quantify the benefits to the US, but they are obvious. Asia is one of the most promising areas in the world, not only politically but economically. To raise a very sound groundwork for future development of this area would be a benefit to the US and world peace.

The Asian people are very pragmatic and stable in their way of thinking in various fields. We should keep this area in a stable relation with the world. Asia is very dependable.

Q. Should the bank begin to provide loans to India and China?m

A. Our bank is a very small pond. We cannot have big fish.

It is not structured to accommodate any big borrower. Our charter prescribes also that our lending should not be disproportionate. There should be some division of work between multilateral organizations. This bank has been structured to meet the needs of many developing members.

India's unilateral policy to not come to this bank for assistance, reflects the concept of the bank's establishment. If we accommodate big countries' requirements, that will affect smaller countries. I don't think it is wise to go that direction. The World Bank should be the one to respond.

Q. Is the ADB different from the World Bank?m

A. Not much. The ADB does assist in smaller, more modest projects. We place importance on technical assistance to help borrowers plan and implemented projects. That can be our way to pursue the future.

Q. What are the ADB's successful projects?m

A. Our lending has expanded remarkably in the last three or four years. We are not yet in a stage to say whether we are satisfied or not.

There are long gestating projects. We cannot say frankly that our objectives have been reached fully or not. In most projects, implementation takes 10 years , and our lending is from 20 to 40 years. We send out review missions once or twice a year, and the implementation can change day to day. We always face difficulties -- such as lack of coordination or cost-overruns. They can be solved within a month or a year. but the problems may come up again. Completion is very difficult. We should be patient.

Q. Has the ADB successfully forced countries to make necessary changes in their economy?m

A. I wish we could do much more. But in reality, that is not so. Our contribution is rather project-specific. Overall reform should be dealt with by the International Monetary Fund.

But we do have "loan covenants" which tie lending to such changes as higher water or electricity charges, or in some cases land reform. They have caused some trouble for the countries. Sometimes we have to compromise, but we do not retreat. The governments have political considerations, and we have economic considerations. There should be some coordination.

Q. Should the ADB loan money to oil-rich Indonesia?m

A. I hope the day will come that this bank dissolves. That is the ideal. But in reality that is not so. Indonesia still has 140 million people and a $ 380 annual income per capita. In world standards, that is a developing country. All their oil resources are not sufficient tocover the development needs. Of course, we stopped concessional (low-interest) loans. But Java is still very overpopulated and in need of such things as water supplies. We have a lot to do in Indonesia still -- technical education, for instance.

Q. The US and some other bank members have tried to orient loans to their interests. Does that cause problems?m

A. This is a nonpolitical institution. But, of course, political issues come up, such as lending to Vietnam.

It is something that I cannot accept openly. Purely economic considerations should be brought up.

Q. Should the ADB loan more money to private entrepreneurs through development finance institutions in each country?m

A. In many parts of Asia, the private sector is very weak. That may be due to governmental policies. There is a limit to including the private sectors. We would lose our priorities of agriculture, energy, and social development.